The equity release market is beginning to show signs of recovery after the lockdown, although activity is still down year-on-year.
Equity Release Council figures for Q3 2020 showed £963m of equity was released in total by new and returning customers, up by 38 per cent from the previous quarter, but down 3 per cent on Q3 2019.
Meanwhile, the total number of new and returning customers stood at 18,154, up a third from 13,617 in the previous quarter, but down 18 per cent from the 22,131 customers served this time last year.
David Burrowes, chairman of the Equity Release Council, said: “These figures show a steady return to something closer to normal activity over the summer, after the market weathered the initial impact of Covid-19.
“With the country experiencing a break from lockdown, the pick-up was helped by a mix of new enquiries and delayed cases from earlier in the year.”
Mr Burrowes added: “Looking ahead, the key market drivers remain in place: people are living longer and retirement finances are increasingly squeezed as generous final salary pensions edge further to extinction.
“Many older households are already facing a situation where their expenses outweigh their disposable income, which makes access to property wealth an important pillar to support later life living standards.”
The figures showed the number of new equity release plans agreed (10,351) had increased by 41 per cent from the previous quarter, as the national lockdown eased.
According to the Council, the return to “some degree of normality” was likely to be influenced by extended pipelines, as some plans that might otherwise have completed earlier in the year came to fruition in Q3.
However, it added that the number of new equity release plans agreed remained 9 per cent down year-on-year, from 11,419 in Q3 2019, and the second slowest quarter since Q1 2018.
A similar trend was found among returning customers, of which 6,697 took extra drawdowns from agreed reserves in Q3. This was up 19 per cent from 5,608 in the previous quarter, although still 30 per cent below the 9,605 seen this time last year.
Commenting on the figures, Mark Gregory, founder and CEO of Equity Release Supermarket, said: “In line with the industry, we similarly faced a considerable fall in enquiry volumes when the country embraced a full lockdown in April.
“However, this was relatively short-lived for us and since May we’ve witnessed double digit growth in our enquiry levels, which we’ve been able to sustain right through until the end of September, with October likely to continue in the same vein.”
Claire Singleton, CEO of Legal & General Home Finance, said: “Lockdown was a huge challenge, both for consumers and the industry, leading to the significant drop in plans we saw early this year.
“Today’s figures highlight that the initial fall in activity was largely down to uncertainty caused by the pandemic, rather than a lack of consumer appetite.
“As the industry adjusted to new working conditions, and consumers slowly tried to get back to normality during the summer, customer numbers, and lending activity, picked up alongside this.”